Types of Equity Release: What Is the Difference?

Which Type to Choose

Did you know there are different types of equity release? Equity release is a way to convert your home’s value into cash, so that you can use the money for whatever purpose you choose. There are two main ways to do this: shared equity and lifetime mortgages.

Shared equity releases involve you giving up some of your home’s value in return for a mortgage. The percentage that you will give to the lender decreases each year until, after 25 years, it is all paid off and you own 100% again. For example: if at first you release 70%, then 40%, 20% and so on – eventually going from 60% to 44%.

Lifetime mortgages are much like shared equity but with one important difference. When using lifetime mortgages, there is no monthly repayment required when interest rates change (which would happen every time they’re raised). Instead, an additional payment becomes due only once the loan has been repaid in full; this could be anytime between five or ten years depending on how you want to repay.


Home reversion plans are a type of equity release that work in the same way as lifetime mortgages, but they are more often used with shared-ownership plans.

Some other types include secured loans, annuity plans and equity release insurance.

Annuity plans are a type of equity release that releases the value in your home to you as periodic payments for life. These can be taken every month, quarter or yearly and are usually provided by annuity providers.

Equity release insurance is sometimes available with lifetime mortgages; this means if anything were to happen it could help pay off the balance on the mortgage so you don’t have any debt left over. All of these different types offer their own benefits and disadvantages depending on what will work best for you!